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0610 04 Purchase Termination Cancellation – Post Award Issued October 31 2007 SUBJECT Purchase Termination Cancellation APPLI

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0610 04 Purchase Termination Cancellation – Post Award Issued October 31 2007 SUBJECT Purchase Termination Cancellation APPLI Powered By Docstoc
					               0610.04 Purchase Termination/Cancellation – Post Award
                                      Issued October 31, 2007

SUBJECT:              Purchase Termination/Cancellation

APPLICATION:          Executive branch departments and sub units.

PURPOSE:              To prescribe the process for termination/cancellation of a non-delegated authority
                      purchase.

CONTACT AGENCY:       Department of Technology, Management and Budget (DTMB)
                      Business Services Administration
                      Purchasing Operations (PurchOps)

TELEPHONE:            517/335-0230

FAX:                  517/335-0046

SUMMARY:              These procedures apply to vendor performances, either positive or negative.
                      These procedures are mandatory for executive branch departments unless
                      specifically provided otherwise by statute.

                      The State may cancel/terminate a Purchase Order (PO) or Blanket Purchase
                      Order (BPO) without further liability or penalty to the State, its departments,
                      divisions, agencies, offices, commissions, officers, agents and employees for any
                      of the following reasons according to the parameters laid out within the PO or
                      BPO contract:
                      •        Cause
                      •        Convenience
                      •        Non-Appropriation
                      •        Criminal Conviction
                      •        Approvals Rescinded
                      •        Unacceptable pricing/terms on a vendor-submitted request for
                               modification
                      The Vendor Performance module in ADPICS is an important tool utilized in
                      establishing a record of vendor performance, as well necessary documentation
                      for contract management. Documentation surrounding ongoing performance
                      concerns is required to pursue termination for material breach.

APPLICABLE FORMS Contract Compliance Report(s)
AND PROCESSES:   Vendor Score Card(s)
                 Right to Cure Letter
                 Termination/Cancellation Letter
                 Internal Agency Policies/Procedures
                 MAIN Electronic Documents & Processes:
                 •        Vendor Performance (PCHL 5260)
                 •        Vendor Performance Disposition (PCHL 5270)
                 •        Vendor Performance Inquiry (PCHL 5280)
                 •        Purchase Cancellation (PCHL8500)
                 DTMB PurchOps Procedures & Policy Letters:
                 •        Signature Authority Letter
                 •        PurchOps Internal Procedures for contract compliance monitoring,
                          vendor performance, contract change processing,
                          termination/cancellation, and close out.

Procedure 0610.04                                                      Distribution Date: 10/31/2007

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                        Procurement documentation:
                        •      Notice of Contract with all executed Contract Change Notices
                        •      Purchase Order with any posted Advices of Change
                        •      Documentation surrounding vendor performance communications formal
                               and informal
                        •      Documentation surrounding contract change request prompting
                               termination
                        •      Documentation surrounding specific reason for termination request
                        •      Contract Folder Tabs 1-6

APPROVALS:              Agency & PurchOps: Internal and external approvals must be obtained and
                        documented according to agency policies and procedures, including provisions
                        surrounding signature authority.

PROCEDURES:

Agency:
   • Must follow their department's procurement policies and procedures, recognizing that the policies
       and procedures of the delegating authority supersede those of the department in the event of a
       conflict.
Department/Agency Contract Compliance Inspector (CCI):
   • Identifies that a problem exists with a vendor’s performance or requested modification, relative to
       an existing contract (PO, or BPO).
   • Reviews the terms, conditions, and specifications of the contract to verify that the expected level
       of performance is a requirement of the contract. It is important to understand the contract and
       know the obligations of both the contractor and the State.
   • Follows the process outlined in the Administrative Guide for vendor performance (see procedure
       0610.03 Vendor Performance), alerting the PurchOps buyer when the situation is at the point of
       the third formal complaint to vendor, and of the desire to initiate termination/cancellation
       proceedings for material breach. There may be situations where a contract must be immediately
       terminated and there is not sufficient time for three complaints, for example when public security
       and safety are negatively impacted. In these cases, the PurchOps Contract Administrator or
       Buyer may issue immediate notice of termination with documentation supporting the action
       maintained within the contract file.
   • Provides PurchOps contract administrator/buyer with all requested documentation surrounding
       contract performance in cases where termination/cancellation for material breach is requested.
   • Provides PurchOps contract administrator/buyer with all requested documentation surrounding
       requests for termination for any other reason, convenience, felony conviction, non-appropriation,
       unacceptable change request, or rescinded approvals.

PurchOps:
   • Confirms that the process outlined in the Administrative Guide for vendor performance (see
      procedure 0610.03 Vendor Performance) has been followed for all performance issues occurring
      prior to the request for termination/cancellation for material breach.
   • The PurchOps contract administrator maintains the responsibility for investigating all matters at
      issue thoroughly before determining an appropriate disposition. This includes a review of all
      documentation surrounding the issue as presented by both the agency and the contracted
      vendor. As part of this review PurchOps will assess the level to which each party met, or failed to
      meet their contractual obligations, and the impact this success or failure brings to bear on the
      matter under review.
   • PurchOps must be the party that takes any necessary action related to termination/cancellation of
      a contract, issuing a stop work order, or the suspension or debarment of a vendor, after
      consideration and consultation with the using agency of a contract regarding available
      alternatives. This applies to PO’s & BPO’s regardless of the reason for the termination request
      (non-appropriation, felony conviction, convenience, etc.).
Procedure 0610.04                                                        Distribution Date: 10/31/2007

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   •   In the event PurchOps determines that termination is the appropriate course of action, the
       contract administrator, buyer, buyer manager, or division director will issue a right to cure letter in
       cases of material breach. The right to cure letter gives notice to the vendor of the actions which
       must be taken within 30 days of the date on the notice, to prevent contract
       termination/cancellation.
   •   PurchOps will confirm with both the agency and the vendor whether the conditions were
       successfully met within the designated time period, prior to issuing a termination letter.
   •   In the event the conditions are adequately satisfied, the PO/BPO will remain in effect, with any
       approved modifications incorporated through contract change notices or advices of change (see
       procedure 0610.02 Advice of Change).
   •   In the event the conditions are not adequately satisfied within the necessary time period as stated
       within the right to cure letter, PurchOps will issue a letter of termination/cancellation, stating the
       effective date of the action, and outlining any rights and/or obligations of the vendor resulting from
       the action.
   •   In cases of termination/cancellation for reasons other than material breach, PurchOps will issue
       the termination/cancellation letter upon review of documentation supporting and verifying the
       correctness of the course of action.
   •   PurchOps will maintain copies of all final documentation surrounding the review and
       termination/cancellation action within the PO/BPO contract folder.

AUTHORITY:     Relevant Acts:
               •      Public Act 431, of 1984 as amended (Governing Authority)

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Procedure 0610.04                                                           Distribution Date: 10/31/2007

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